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Tribune to Explore Value Creation Alternatives; TMCT
Partnerships to be Restructured
CHICAGO, September
21, 2006 -- Tribune Company (NYSE:TRB)
said today that its board of directors has established an
independent special committee to oversee management’s
exploration of alternatives for creating additional value
for shareholders. This process is expected to conclude by
the end of 2006.
"In pursuing the leveraged recapitalization
that was launched in June, we emphasized that it would not
preclude us from pursuing other value-creating initiatives
in the future," said Dennis FitzSimons, Tribune chairman
and chief executive officer. "Today's actions,
along with our performance improvement plan, are consistent
with our overall objective to generate the most value for
all Tribune shareholders."
Named to the special committee of the
board were Enrique Hernandez, Jr., Betsy D. Holden, Robert
S. Morrison, William A. Osborn, J. Christopher Reyes, Dudley
S. Taft and Miles D. White. "Management and the board have
been working together to determine the best course of action
for creating shareholder value. The board unanimously agrees
with this approach, and we will work expeditiously to complete
the process," said Osborn, Tribune’s lead independent
director.
The company also announced today the
restructuring of two partnerships known as TMCT, LLC (TMCT
I) and TMCT II, LLC (TMCT II), which it inherited six years
ago in its acquisition of Times Mirror. In a unanimous
vote, with Chandler family representatives abstaining due
to their interests in the partnerships, Tribune’s
board approved the terms of the transaction.
The two partnerships currently own all
of Tribune’s
preferred stock, 51.3 million shares of Tribune common stock,
real estate used by the Los Angeles Times, Newsday, Baltimore
Sun and Hartford Courant, and various other investments.
Under the terms of the restructuring, Tribune will receive
distributions of all of the Tribune preferred stock and approximately
39.5 million shares of the Tribune common stock held by the
partnerships. Tribune also will receive the right to acquire
the real estate owned by the partnerships in January 2008
for $175 million. Additionally, Tribune will retain a 5%
interest in the partnerships.
The Chandler Trusts will retain a 95% interest
in the partnerships. The two partnerships will distribute
within 30 days the 11.8 million shares of Tribune common
stock remaining in the partnerships to the Chandler Trusts.
As a result, the Chandler Trusts will increase their holdings
of Tribune common stock to approximately 48.7 million shares
from approximately 36.9 million. The Chandler Trusts have
agreed to vote these additional 11.8 million shares in the
same proportion as all other shares are voted on any matter
requiring a shareholder vote for a period of 12 months from
the date of this distribution.
As a result of the distributions, the
number of shares of Tribune common stock outstanding will
increase by 1.6 million. The reason for this increase is
that the 39.5 million shares of common stock Tribune is
receiving is less than the 80% of the common stock in the
partnerships that Tribune currently treats as treasury
stock for financial reporting purposes. Tribune’s
earnings per share will not be affected by the restructuring
because the impact of the increase in shares outstanding
will be offset by the elimination of the preferred stock
dividends. The company expects to record a one-time gain
of approximately $45 million as a result of the transaction.
"The Chandler Trusts are pleased that
we reached an agreement that serves the interests of all
Tribune shareholders. We will now work collaboratively with
management and the board to build value for all shareholders,"
said Warren B. Williamson, chairman of the Chandler Trusts.
"The restructuring of these partnerships
frees the Company to move quickly to pursue strategic alternatives
to further enhance shareholder value," said FitzSimons. "Under
these terms, all shareholders benefit."
In other business, the Tribune board of directors approved
the sale of WLVI-TV (channel 56), Boston, to Sunbeam Television
Corp. for $113.7 million. The sale was announced on Sept.
14, 2006, contingent upon board approval. The transaction
will close upon regulatory approval.
The sale of WLVI is part of Tribune’s
performance improvement plan announced May 30. The plan
includes at least $500 million in asset sales and approximately
$420 million have been identified so far. On Aug. 7, Tribune
completed the sale of WATL-TV in Atlanta for $180 million
in cash. In July, Tribune sold 2.8 million shares of Time
Warner common stock for net proceeds of approximately $46
million. In June, the company announced the sale of WCWN-TV
in Albany for $17 million.
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TRIBUNE (NYSE:TRB)
is one of the country’s top media companies, operating businesses
in publishing, interactive and broadcasting. It reaches
more than 80 percent of U.S. households and is the only
media organization with newspapers, television stations
and websites in the nation’s top three markets. In
publishing, Tribune’s leading daily newspapers include
the Los Angeles Times, Chicago Tribune, Newsday (Long Island,
N.Y.), The Sun (Baltimore), South Florida Sun-Sentinel,
Orlando Sentinel and Hartford Courant. The company’s
broadcasting group operates 25 television stations, Superstation
WGN on national cable, Chicago’s WGN-AM and the Chicago
Cubs baseball team. Popular news and information websites
complement Tribune’s print and broadcast properties
and extend the company’s nationwide audience. |
